A recent study by Florida Atlantic University highlights three cities in the Tampa Bay area as some of the most overvalued housing markets in the United States. According to the findings, home buyers in Tampa paid an average premium of 42.81% for a home, ranking it as the third highest in the nation, trailing behind Cape Coral and Atlanta.
Remarkably, seven out of the top 10 overvalued markets are located in Florida, with Lakeland and North Port also making it to the top 5. In Lakeland, home buyers paid a premium of 41.96%, while in North Port, the premium was 41.74%.
Ken H. Johnson, a real estate economist at FAU, noted that while many cities in the country have seen prices aligning with their local long-term trends or experiencing a slight cooling in recent months, Florida stands out. Prices in the state have remained strong, leading to an increase in premiums throughout.
The study attributes this trend to high demand coupled with limited housing supply, prevailing despite higher interest rates. Johnson emphasized that the likelihood of a significant drop in prices or a sharp increase is minimal. He suggested that those planning to hold onto a property for five to eight years should face little risk. However, the strategy of buying now with the intention of selling within 12 to 24 months for a quick profit is less likely to be successful.
The Top 10 overvalued housing markets, based on the study, are as follows:
- Cape Coral, Florida
- Atlanta, Georgia
- Tampa, Florida
- Palm Bay, Florida
- Detroit, Michigan
- Lakeland, Florida
- North Port, Florida
- Deltona, Florida
- Orlando, Florida
- Knoxville, Tennessee
